we are very fortunate today to have with us John hewa who is the CEO of the nation’s largest electric co-op we’ve had we don’t think we’ve ever had a keynote speaker from a co-op before we’ve had muniz and investor owned utilities we had government people but it’s great and we feel very lucky to have the perspective of somebody who’s running a co-op let alone the biggest co-op in the nation it’s serves the beautiful hill country and you saw the area of the Persian Ellis co-op if you saw the movie boyhood a lot of scenes filmed out there John hewa is as I say the CEO of pinellas co-op he’s also involved heavily involved in a number of industry associations including the solar electric power Association the National Rural Electric Co opposition in the American Public Power Association he is an engineer by training and holds a bachelor’s and a master’s degree in engineering from the other UT the University of Tennessee so please join me in welcoming donkey one to be here today just thrilled with the chance to to talk a little about electric co-ops my goals for the day or to make sure that you understand what’s happening amongst America’s electric co-ops to give you an update about pronounced electric co-op for any members that might be in the room to talk a little bit about when we see the industry going a little bit of the work that’s happening at the solar electric power association as well have the distinct privilege of having served NRECA a national network I spent two years running a national research program not the kind of research is happening at universities necessarily more of an applied research applying these technologies to the grid we see the national co-op network as a is a very real living laboratory today with me also is dr. Peter mahoro Peter is the research director of research and energy strategies at Parnell’s he’s joined us to about eight months ago and I wanted to make sure that folks knew that Peter was in the room here very thankful for the skills that he’s bringing to our cooperative today if you the national network over 900 coops covering more than seventy percent of the landmass of the United States a couple million two and a half million miles of power lines and it requires great great capital and investment in order to keep these systems going coops are required to spend more dollars pound per pound are faced with serious rural exposure and it’s very interesting how the technology opportunities and the changing landscape a more distributed landscape I believe is going to play out very very favorably in the electric co-op space the principles that we adhere to our the same today as they’ve been over the years we have a very diverse membership with with a high degree of expectations our members are our owners I think that’s important to understand in terms of the co-op model and we we operate on highly democratic principles making sure that our membership has a clear and conscientious voice we’ve got it sir everyone from the family in the lower corner to this gentleman and they may have very very different expectations of their co-op now how does this model look nationally on a national level coops fare very well in terms of the American Customer Satisfaction Index we score higher than iou’s that are serving about eighty percent of the industry our model is a very tough model we have a much much lower density or much lower size our size is more similar to the municipal market very small in comparison to the averages for the larger I use in the nation in terms of consumers per mile a huge difference here in the way we think about distributed energy and technologies how these technologies pencil out is very different in an environment with seven accounts on average per mile versus a high high density arrangement I’ve had the opportunity to be a municipal system manager also spent my first 10 or 15 years of my career as in the municipal side and I was a Utilities manager at the city of manassas virginia a very high density system outside of the the DC area so I’m familiar with that model as well our revenue per mile is much lower although the and the capital and the maintenance investment / consumer is much higher so this creates a very challenging environment if you look back over 77 years now the at the founding of parnell’s today the nation’s largest distribution co op in the nation then congressman lyndon b johnson instrumental in working with local ranchers to secure the first loans from the federal government to allow rural electrification in our region today our

system has grown to a massive utility in terms of the electric co-op space we’re serving over two hundred sixty-six thousand accounts today growing at a rapid rate our revenues are in the 620 million dollar range we are operating on a base of about seven hundred and twenty employees with a lot of support from some of the nation’s strongest consultants and contractors if you look back at 2014 we’re knocking right on the door of 5.4 billion kilowatt hours we’re experiencing over 9000 meters of growth serving some of the nation’s fastest growing counties as reported by Forbes late last year and in 2013 we’re serving the regions around Austin and bumping into regions to the north and west of San Antonio and our sustained growth at this point is close to four percent over three point nine percent growth last year we don’t see that slowing down anytime soon I can assure you we are not searching for our next megawatt hour or kilowatt hour of sales in fact as a wires company as a distribution co op I believe that model bears very very well in terms of the way we intersect with technologies distributed generation is not a threat to us we own and operate a wires system if we are delivering wires energy and electrons from Central Station service down to the meter that’s fantastic if we are delivering energy for one consumer across our grid to another consumer that’s fantastic if we are supporting our members our owners in new technologies to ease and help in advance the implementation that is a wonderful outcome and that’s part of our purpose our territory is approximately the size of the state of Massachusetts it is bifurcated into two different territories and you might imagine there’s a few challenges that come with this the eastern territory bumping into austin in San Antonio about 16 accounts per mile some of our districts are above eight percent sustained growth in that territory our western territory to accounts per mile so we’ve got about four thousand miles 21,000 miles of line in total about 4,000 miles of those line at 8,000 consumers in our western territory so when we look at technology systems we look at small wind rooftop photovoltaics and other emerging technologies we see them playing out very very differently and I want to make sure we cover some of that today now before we get into a discussion about where this is going from from the coop perspective I think it’s important particularly for pgc for me to take just one moment and check in on the health of the coop this is our members coop the coop is in great shape we have favorable ratios in terms of declining costs we have favorable ratios in terms of increased efficiency per employee we are under way I see a Christian Berg here we’re underway with a cost of service study with birds McDonald we’ve lowered rates twice already we’ll have our third rate reduction May one that’s three reductions in six months and we’re not finished tyvek we’re just getting started our reliability I would put up with any utility much less electric co-op in the nation our average outage time / consumer last year was about forty seven and a half minutes so when we look at 8760 hours in a year to be counting reliability for a still rural utility system counting that in minutes and well under an hour is a great great feat of accomplishment we’re doing a lot of foundational work we’re putting in new mapping and new infrastructure in terms of establishing very precise very precise underpinnings of the utility so that we are prepared for a much more surgical operation of the grid in the days ahead we’re doing this both operationally and in terms of the assets we’ve outfitted 400 of our trucks would be equal tracking technologies so we have better better control over how we’re operating the system we’re in some cases covering the fundamentals in new ways in terms of making sure the cash register of the utility is in check we’re doing a lot of work to help our members with energy services and we’ve just recently began working with Honeywell and going to be bringing in some of their tools to help our energy services staff work at a higher level in terms of the sophistication with our membership regarding lighting we are working in directions of conservation and night skies compliance converting many of our lights to LED to reduce our energy consumption and we happen to be the first co-op in the nation to have entered into a pole attachment agreement with Google for their fiber deployment we’re anxious to see Google bring their services to our region our workforce very strong 720 employees today pulling down top ranks and tops of top awards in terms of our line worker capabilities at the rodeos and we have now begun to

reach out and do some work within our essays international program we just had a team that got back from Haiti helping with electrification in that part of the world so we’re very proud of our team and the work that they’re doing in the final stage of kind of checking in on the health of the coop later this year we’re going to be ushering in some new new internal tools and technologies a rapid electronic work order and tracking system which will be at the fingertips of our employees and we’ll be introducing a complete mobile suite in terms of our member billing and customer interface this is very very important in the ERCOT market certainly the world has gone mobile certainly we get that but in our space we’re seeing a need to be able to interact very dynamically very fast very firmly with our membership this platform is paving the way for us to introduce new rates more dynamic and time-oriented rates but very importantly the notification capabilities we have to do a very very good job at being able to inform our members what’s happening in the real time or cot market in this state we are leaders in energy production and we are leaders in energy consumption in terms of the growing demand and the demand for electricity is certainly on the rise you’ve heard about the number of accounts that we’ve added to our system ironically we’re still looking our co-op is still referencing on August of 2011 peak we’ve added probably 40,000 accounts since that time frame 30 to 40,000 accounts and we’re still talking about a peak occurred in 2011 so some concerns over what those Peaks going forward will be look like will look like how much of a role has energy efficiency played how much of a role has distributed generation played and what will we see if we’re faced with those types of weather scenarios again in Texas it would we use energy very differently than the rest of the nation you’ll see that residential were predominantly a residential utility although we have a lot of growing commercial demand you’ll see that residential in Texas is thirteen percent as compared to about twenty two percent around the rest of the nation you would think that we use less energy we don’t actually our average consumption is rather high one of the top states in terms of average consumption per household and so at the co-op today we’re in the in the 1200 to 1300 kWh range per month per residential consumer now in the air cot market what I find most notable and most interesting from our perspective about the market and we have seen the pricing be quite soft here recently I know there’s some perk up folks in the room but this is what this is not a typo on this graph this is what we’re looking at for this June and we were developing the slide my team we wanted to put a little amplitude to this I don’t know there’s let it scale out let the scale be what the scale is normal price of electricity let’s say $35 a megawatt-hour it could be much lower it could be higher but let’s just call that an average and June one we have a a price cap that will be set at up to 9000 and we’ve seen some price cap hits in the last couple of years this has a very profound impact on the kinds of decisions that we make on wholesale energy it has a huge impact on how we see new technologies coming to bear along with this type of possibility in this range of scenarios we’ve seen our transmission cost essentially double in the last decade we’re now spending about 50 million a year out of our 600 600 20 million in revenues actually about 55 56 of that is going to transmission costs that’s based on for 15 in 15-minute intervals what’s happening to our system for 15 minutes in june 15 minutes in july august and sep tember that that scenario brings in invoices to us and expenses to our member consumers on the order of 56 million dollars so you take those realities along with our energy only market and the ranges that we could see and it has a big impact on the kinds of decisions that we have to make is a member-owned co-op LCRA is our primary energy provider we’re required at least for the next many years to to to have at least sixty-five percent of our energy coming from LCRA and recurrent contract we have been diversifying that and working with others in the state of texas but when you look at these possibilities it has a big impact on these decisions how much exposure do you want in the market how much exposure do

you avoid and how do you shape new power supply arrangements to make sure that we’re bringing the best of the market and the best of firm delivery to our membership regarding our energy footprint today the coop has a renewable energy goal to achieve thirty percent of its capacity by 2020 so we are on track for that we’re working closely with our power suppliers today we’re at about twenty two percent combined capacity much of that is coming through wind the south Trent wind project and some of that energy is also coming through our relationship with LCRA albeit that the hydro capacity hasn’t produced a lot of energy units in the last few years so that is a concern don’t know which way the wind is going to blow or the rains going to fall on that one but there’s some resource there that that we’d like to see it put to better use but that’s out of our hands at this moment we are conducting again with burns and McDonnell a integrated resource plan will be unveiling that to our membership later this spring and then working to to make sure that our members understand the kinds of energies energy and technology decisions that we’re going to be making it’ll be before us in the years ahead so if you look back and where we’ve been over the last hundred years actually the video we showed at the front of this the infrastructure that’s in the ground and in the air today doesn’t look a whole lot different it’s actually pretty recognizable compared to some of the stuff you saw in that early video so it’s a really interesting how this industry how coops movies and I use alike have what has been achieved with the economics of the delivery system where we’ve taken central station service and how we’ve used essentially the same building blocks we’ve scaled and scaled and scaled the same building blocks and in some cases our organizations have done the same and today we’re seeing those building blocks begin to change very rapidly and I’m here to tell you i think this this plays out very very well in rural America for a lot of reasons what do we see happening what is my perspective on where we’re heading well we’ve got a wave of new expectations we’ve got growing expectations from our members we’ve talked about reliability we’ve been lowering rates our members expect new levels of service and new optionality in the decisions that we present them within the options we’ve got new technology powered by advances in telecommunication and computing we’ve got new or emerging or evolving markets I would say still such as the one we might be in and we’ve got new regulations everything from the clean power plan to other regional haze haze and other other regulations at a federal level that have state impacts so with the wave of new expectations comes a wave of new grid technologies a lot of what’s being discussed at this conference everything from solar at the at the micro and macro scale to synchro phasers advanced advanced telecommunication nodes on our distribution systems these are not transmission only solutions Big Data solutions energy storage micro grid combined heat and power and who knows what’s next and we merge that from utilities perspective with what we see as a wave of consumer technologies everything from plug-in electric vehicles to programmable thermostats and programmable and smart appliances and we take that even to the left to the level of intelligent building systems and a new wave of location-based services and we bring those together and we start to see a grid and an energy supply that looks very very different we’re making different power supply decisions as texas leads the nation in wind of course and is emerging very very rapidly we’re seeing some unbelievable prices at the wholesale level for for wind and solar our grid is becoming more distributed we’re overlaying more technology on our systems and we’re using our grid in different ways and that will only grow into the future and the business services and the horsepower we’re puttin underneath the hood if you will is evolving pretty rapidly as well we’re moving to cloud based solutions we’re moving too much more dynamic solutions and the ability to make sure we’re communicating very rapidly with our membership what do our members tell us they want they won’t improve self service they want to be able to do more with their information more with their account they want immediate responsiveness whether it’s the state of the grid energy supply pricing the

status of an outage they want very specific very tangible actual information about their energy supply be it commercial industrial or residential and they want a much higher level of knowledge and control these are the principles and the foundations that we’re working to deliver on right now in the decisions that we make going forward I mentioned earlier that I have the privilege of serving on the solar electric power association board of directors and I think it’s interesting when you look at the when you look at the the onset and the evolution of solar energy one of the favorite graphics to take a look at here is this breakdown yellow is in residential and blue is in commercial you’ve got green as utility scale and as you look over multiple year period you see that there’s certainly a kind of a lagging factor here in terms of when utilities really have started to kick in and of course today we’re seeing massive investment in utility scale photovoltaics but I think there’s a lesson learned here in terms of the way that our consumers have been leading in terms of residential and commercial and I think we ought to be introspective on our our maturity in this space and the timing at which we’re starting to really kick in and bring solutions to bear and really begin to support our consumers dr. mahoro is here in the room one of the things that we worked on together and he authored a grant at the federal level coops are doing a lot of work a lot of work around the country on advanced grid and they’re doing a lot of work around the nation on photovoltaics I want to spend just a few minutes talking about that one of those projects is the the geared proposal an effort where coops have worked with the Department of Energy’s SunShot program to work with consortium of universities across the country in preparing new curriculum to enable our future leaders and our folks that are going to be in the energy space a real good example of a national trade association in the research program which we both spent time in a real good example of the our of coops at a national level working with the National Laboratories and working with university systems a similar project that we are participating in now also born out of our national co-op research program the Cooperative Research Network is an effort with the Department of Energy called Sunday solar utility network deployment acceleration sunday is all about taking utility scale solar whether it’s whether its root ility own utility scale or whether it’s community owned utility scale and accelerating the deployment of that technology instead of having 900 utilities figure this out and reinvent the wheel so speak sunday is about helping see the information in those engineering departments and in the mindsets of those leaders to help them understand what’s the footprint what are the approximate cost what is some of what are some design templates that could help launch a utility in this direction and that program even involves a national procurement arm which is making inverters and panels and other gear available in a prepackaged discount environment and electric co-ops are stepping up to the plate number of electric co-ops today are beginning to deploy a utility scale solar and a particular focus in our world on the community scale version at p ec we’re working on just the same we are working today to develop a community solar project or a couple of series of community solar projects and we anticipate allowing our members to subscribe to those our goal is to allow our members to have access to the economy of scale that a utility scale project brings and to address the membership that may not want to make the long-term commitment rooftop or the membership that doesn’t have a rooftop that is suitable which is about seventy percent of homes that may not be suitable and we want to make sure that we have a utility centric solution to help them in terms of their investment we believe we can be a broker of sorts in terms of those transactions we can bring that economy of scale that centralization and we can actually deploy these systems on our grid where they make sense in terms of the cost of land and the integration speaking of rooftop and speaking of our membership the drivers are certainly well known in this room but I feel very

confident that in rural America in general and across our territory that the driver of self-sufficiency is going to play out in a huge way in terms of the adoption of rooftop oval takes this is a picture from our recent solar tour we hope held our solo tour the last couple of years we’ve had a couple of hundred members that have convened and now beginning to bring in vendors and talk about what the coop is doing to support members and allow members to their ideas and their concepts around rooftop residential commercial solar the principles that we’re operating on moving forward and I thought it might be relevant to the group and you notice I’ve listed avoiding cross subsidy in our boardroom and what we hear from remember is we have tremendous enthusiasm about rooftop and behind the meter PV and we have also folks that talk about and are concerned about subsidy and we’re working to bring those two mindsets together to develop programs that we believe are going to satisfy all of our membership how do we be a strong supporter again we’re not in this for the sale of the kilowatt hour the megawatt hour we’re distribution utility how do we support our membership in ways that the coop brings scale and an expertise and other partners to the scene to make sure that we are enabling an advancing distributed generation we have seen of course an uptick as you would imagine and we expect 2015 and certainly 2016 to be banner years in terms of consumer investment on our territory we are in the process and our Board of Directors recently approved the implementation of on bill financing platform we’ve looked at rebates and we’ve looked at other options and yes we think we have a way to help our membership in terms of community solar but when we get down to the behind the meter solution where where can the power of the coop really intersect with the membership we believe that is in terms of on-bill financing we have access to very low interest capital we have the ability to we send out power bills every month we send out a notification we have folks that do credit checks we have member service teams we have a renewable and distribute energy manager we have all the folks and all the resources that we need and one of the final steps that we believe could be very successful is the implementation of an envelope in an seng program if you were to take a 7kw system at about two dollars and eighty cents a lot that’s about a 19500 our investment and you were to look at a 10-year loan term we believe that the financing that we could make available could reduce the total ownership costs by as much as three thousand dollars it still allows our member whether commercial or residential to gain access to tax credits we believe this is a model that survives beyond any kind of tax credit or subsidy it’s a model that internally is equitable because it doesn’t put any pressure on other parts of the coop and it’s doing what we do best which is using the power of our membership convening to make to advance the delivery and production of electricity so we we see this as a as a model that is very appropriate for the type of utility that we are we believe it will be a model that will be seen as a great addition to the vendor community we’re in a part of the country with a really strong community of installers so at this point we don’t see a need for our co-op to get in that space we see a need to help connect members to the resources that are going to allow them to advance their own goals and initiatives in much the way that we’re working to help our membership were deeply involved and I have the privilege of serving on the board of directors of the solar electric power association and sepa is a if you’re not familiar with sefa I’ll just take one moment to explain a little bit of the work that sefa is doing because I think it’s very important to the folks in this room sepa is the place where utilities and the industry intersect sepa is doing a lot of work in terms of trying to cut through any of the controversies that have existed historically or traditionally between consumers the solar industry and the industry today cephas membership is quite strong look at that 93% of installed us solar capacity is through sepa oriented member utilities utility membership and Industry membership and that’s the key takeaway here those groups are convening and a lot of great work is coming out of this a lot of very tangible reports some date back even a few years now but a primer to the value and the arrangements of net electricity

metering a topic that folks in this room well have mastered but is a topic that in terms of lawmakers regulatory bodies still one of the most popular reports because it brings in a lot of fundamentals other work on the integration of solar and the challenges that are being faced and overcome locational placement of solar and these reports and these initiatives are designed with utility input they’re designed with consumer input and very importantly they’re designed with industry input and I think that’s what makes the work that seep is doing today very very tangible helping utilities understand what’s happening around them in the space around them and other installations who’s doing what when where what’s it costing and even fact-finding missions both domestically and international the last thing I’ll say about the work of sepa I think is one of the most important things that’s underway right now sepa late last year convened a call for interest from all parties from the national trade association zei APPA NRECA from industry from think tanks from consultants a call for concepts regarding the 51st state a new energy paradigm that is sustainable to take away and say if we didn’t have the markets we had today and if we didn’t have some of the constraints that we have today and you were building this from the ground up what would this look like how would we design a new grid going forward what would be the role distributed energy resources and how would we cut through the controversy and design this in a way that is sustainable that intersects with all parties of all interest and creates a win-win scenarios so with that I’ll close here we’ve got a lot going on in this co-op and I’m really thankful for the opportunity today to tell you a little bit about what we’re working on in terms of our core business in terms of where we’re heading with new technologies and certainly in the enthusiasm that we have and I hope you can see that enthusiasm the interest that we have in doing a really solid job of helping our membership meet their goals and advanced clean energy initiatives here at the co-op so with that I thank you for your attention I look forward to the rest of the event and certainly ready to answer any questions if there are any from the folks here yes sir thank you my name is like a visa deep I want to congratulate you and your king I’m very familiar with your success and I think you have achieved a lot with your item budget that said you know there are almost 70 880 corpse operating in Texas absolutely a major difference between many of them and pay technologies you are saving a lot of affluent and wealthy communities and many of those costs really do not have that privilege to what extent that has been a factor in your success and if yes to what extent can you convince other cooperative sure to not have the kind of customers that reduce them you know absolutely great question first of all the disparities in the coop space and an unbending immunity space as well the disparities are large in terms of resources size and scale and staff and so we we are fortunate to have a certain scale of resources to allow us to do things in a different way we’re pursuing federal grants in fact we’re working with with this UT on pursuing some federal grants right now we’ve been so we have the ability to do those kinds of things that our co-op this really goes back to what’s happening at our national trade associations I spent a few years running the coop national research program and the basic premise of that program was to help and is to help utilities connect and intersect with beneficial technologies some of these organizations may not have engineering staff some may some may have large battalion small to help those organizations avoid technology pitfalls so they’re not replicated to intersect the beneficial technologies and to draw out of that now beyond beyond that intelligence that comes from from that kind of approach similar to what CEO is doing there are some very tangible things that need to happen one of those is like the solar utility Network acceleration being able to deliver at least a preliminary design it doesn’t include local environmental or permitting but to be able to deliver at least a preliminary design to a CEO or GM or an engineering director at our utility to get them started in the direction of a deployment as the cost of of these community and

utility-scale systems and the behind the scale systems continue to drop I would encourage you to think about the very rural landscapes that we serve what what may be different about our territory and other Texas coops is in fact the landscape so you’ve got longer lines with more significant maintenance heavier voltage drop heavier cost per mile greater reliability concerns and the need for end of line voltage support so when I think about and we’re in fact beginning to look at a small scale behind the meter energy storage we’ve got line extensions in our western territory that we’re looking at that we think well you know I may be able to defer that asset I mean to be able to avoid that asset entirely with the boost that we could get from an energy storage system or potentially an energy storage system in concert with a renewable energy system so yes we do serve a certain type of membership in our region but I believe that when you look at how in the long haul how distributed energy plays out in the most rural parts of our territory I think the play there is actually as big if not bigger and those folks have the real estate to invest we’re seeing systems get bigger and bigger on our territory we’re seeing a lot of ranchers a lot of barns a lot of ground mounted systems we’re beginning to see that at a much bigger scale than we saw just a few years ago Daniel cushion from the University of Washington yes sir you mentioned in early new presentation that you have two parts of your system yes they seem to have relatively different correctly very different how do you as a co-op ensure fairness between the two parts of your system absolutely great great question so you know the assets of the cooperative are are governed by our board of directors they have a fiduciary care responsibilities across all assets all programs and all interest of the coop and yes we do see a markedly different capital intensity in certain parts of our territory we are required to have you know non-discriminatory rates so we from a regulatory standpoint we we begin with that but beyond that part of the co-op model is seeing out for the rest of the co-op territory we do work to avoid subsidy we did have to change our facility extension fees a few years ago to make sure that we weren’t overspending in areas that required longer extensions so we’ve made some structural changes to our rate base to ensure that we’re not over overextending on a facility extension now today our facility our fixed fees do remain constant across our entire network that’s why we’re working with folks like burns and McDonnell to come in do a cost of service study and take a fresh new look at what those numbers might pencil out to be yes sir i’m dr. Gus lot with your calm I actually happened to live two miles north of the Parnell’s river bridge just north of Johnson’s all right in all of the activities and incentives or whether you call them incentives were not in your strategic planning at what year do you think the rural community will not just have knowledge but begin to act yeah I’m that knowledge absolutely I see that happening right now many were we are putting in systems today that that are going to be I think very much advance the ball in terms of our legacy platforms I see this happening all across the country I do see a lot of action a lot of coops have been early adopters of smaller scale maybe not the largest scale systems as you’re seeing across the country but they’ve been early adopters and have embraced themes like community solar very early I do believe that that the research work and the application of those technologies as that’s happening one of the things that you’re beginning to see and you see gained a lot of momentum in the coop space is a completely different tone and a completely different theme than we may have seen even two or three years ago I’m very thankful to start to see that tone of conversation I think it’s the right tone of conversation and I believe that you’ll see electric co-ops in every regard step up to the plate and find ways to make sure they’re supporting technologies in general but specifically rooftop and another distributed generation yes ma’am oh sorry okay Dave total University today’s great work sir um with your for CP expenses at the transmission and the nine thousand dollar system would offer cap can you describe some more your dr programs what you’re putting in place and are you using peak shape and rebates or what’s the tariff structure to encourage that as well as the hard-right vestments so we have a fairly traditional rate structure right now and we are working on some time oriented rates we’re putting right now we’re putting in the foundational programs to allow us to be to do better notifications to members we expect to have at a minimum a time of

use block rate we are looking at a buy-sell tariff for solar photovoltaics right now we have a net energy metering system it is a i think a pretty healthy net energy metering system we’ve seventy percent increase this past year in the avoided costs so we’re reaching back in and modifying and updating some some equities that need to be there in our business model what’s interesting in texas for us and what I’m seeing amongst others is the because we we don’t have the capacity market and because of the energy only market I believe that it’s having a pretty big impact on on actual demand response investment it’s difficult for us to know exactly what’s going to pencil out we’re really excited about energy storage because the right characteristic of battery can either be emergency response system it can be some other form of ancillary services it could be standby or it can be energy energy arbitrage which starts to get more predictable so one of the reasons we’re pursuing some federal opportunities and federal grants regarding energy storage is because we believe that’s going to be the flavor of the best technology for us moving forward it fits in a rural environment because of the rural exposure and the reliability issues particularly on the fringe of our network it fits because it provides voltage support at the end of the line it fits because we have higher line losses than a really compact environment so I envision energy storage as our one of our primary technologies in addition to that right now we are working on some discussions with some of the major manufacturers about programmable thermostats and active you know demand response type programs but we do not have a legacy program installed at this point yes John this has been a fabulous talk and it’s really great to hear from a very progressive distribution level co-op thank you very much time as well at the NRI CA and in Minnesota we have a lot of rural cops which span the range there are people pushing the envelope to those holding on to it fast and beating you when you talk to them um could you talk a little bit about some of the political yes so you’re in a system that’s great glad to that’s not others but across room because you’re so politically powerful as well it would be glad to the the value the mindset and the momentum that comes out of the national trade associations is absolutely critical I spent a lot of years with American public power folks working for a couple municipal systems I spent at it spent five years on a G&T board in Florida and I was a co-op manager as well so I’ve worked in a few different states the southeast the Northeast and here in Texas really the going back and looking at kind of the the mentality of the association’s one of the concerns that I’ve held is that we’ve got to get beyond any kind of protective thinking one of the benefits that we have that may be a little bit different than some of the other coops is that we are not a G&T affiliated co-op a lot of the distribution comes in fact most of the distribution coops across the country just as the members banded together to build coops coops banded together to build G and T’s that were coops of coops that model is a little more tricky and difficult in terms of megawatt-hour sales because they have an equity stake in the generation assets and that is a different model than we at Parnell’s have right now we I think have the good fortune in this case of being non GT affiliated the direction of the energy flows is rather irrelevant notwithstanding any reliability concerns that is a big principle so the G&T community is a community that is beginning to change its mind set as well it’s happening may be slower than some would like but it is happening it is happening well at this point and I do believe you’re going to see just as you saw in that sepa graph you saw that the utility inertia started kicking in and you see large-scale systems at the rates we’re seeing out and talking about you know solar in the fortify you know four to five cent range easily and we’re seeing wind in the you know two to three cent range easily on the wholesale level I think those those prices become really somewhat undeniable in terms of pure economics not not so much I mean there’s they’re going to be replacement energy there’s going to be and as it begins to as it begins to get more and focus behind the meter then utilities are going to start to change and you’re seeing this happen they’re going to start to change that cost structure that rate structure certainly we want to make sure that we have a rate structure that’s conducive to behind the meter investment other utilities are looking at what that fixed charge ought to be that’s a very controversial topic around

the country so I believe these utilities will find ways to further and embrace solutions but also cover their costs and make sure that they’re earning enough return on investment to keep the organization healthy yeah okay sous chef thank you very much quite a big thank you